Nearly 400,000 jobs will be added to the workforce over the next 18 months as the unemployment rate plunges towards 4.5%, according to Treasurer Wayne Swan.
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Swan made the announcement at the Federal Government’s mid-year budget review, stating the budget was in “very good nick”.
“The update forecasts strong growth, falling unemployment and a big pipeline of investment that’s going to be gathering momentum,” Swan said.
The Mid-Year Economic and Fiscal Outlook shows the forecast for a budget surplus in 2012-13 has been reduced to $3.1 billion.
The 2012-13 forecast compares with the $3.5 billion predicted by Treasury and Finance in the Pre-election Economic and Fiscal Outlook released in July.
Swan said the strength of the Australian dollar wiped $10 billion off projected revenues.
“Despite the global uncertainty and the impact of a higher Australian dollar on revenues, the update shows the budget remains on track to return to surplus in 2012-13 – well before any major advanced economy,” he said.
ANZ chief economist Saul Eslake says he doesn’t have any objections to the forecast, applauding the government for honouring its commitment to return to surplus ahead of schedule.
“Driven by the mining boom, the Australia economy is going to experience above-trend growth, which will ultimately see the economy operating at full capacity,” he says.
Westpac chief economist Bill Evans says there is “nothing really surprising” about the new forecast.
“The government is now giving credibility to a much higher Aussie dollar… which of course affects so many small businesses,” he says.
“[Small businesses] need to be aware that the pace of fiscal consolidation is much more rapid than we’ve seen coming out of previous downturns.”
“That means that there’s not going to be a whole lot of largess around to support small business until the government gets back to surplus.”